Creating a More Inclusive and Sustainable Future
Unlocking Forecast Quality: The Power of Material Sustainability Disclosures
Accounting and Business Research
In 2013, the Sustainability Accounting Standards Board (SASB) began releasing guidelines to identify material (or financially relevant) sustainability metrics. This study investigates the effects of material and immaterial sustainability activities on analyst forecast error and dispersion. We further examine how these effects are influenced by the issuance of stand-alone sustainability reports and the release of SASB’s material sustainability standards. Using a sample of US firms from 2005 to 2018, we find that material sustainability activities are associated with more accurate and less dispersed analyst forecasts when firms issue stand-alone sustainability reports. Among firms that do not release such reports, material sustainability activities improve forecast quality only after the initial release of the SASB standards. Immaterial sustainability activities appear to add noise to information in the financial market and confound earnings forecasts, especially during the pre-SASB period, but this confounding effect reverses in the post-SASB period. Overall, our findings provide empirical evidence that classifying and disclosing corporate sustainability activities yield economic and informational benefits in capital markets.
Sue A. Cooper PhD EA CMA MEd MBA, Visiting Associate Clinical Professor of Accounting, University of Maryland, College Park, and Jennifer Yin PhD, Professor of Accounting, University of Texas at San Antonio, and Harrison Liu PhD, Associate Professor of Accounting University of Texas at San Antonio
Effects of Greenhouse Gas Emissions and Climate Change Policy on Audit Fees
Accounting and the Public Interest, December 2025
This study explores the correlation between greenhouse gas (GHG) emissions from U.S. companies and their audit fees, driven by the escalating frequency and intensity of extreme weather events. Building on prior research that connects climate risk, regulation, and audit fees, our investigation uses a sample of companies with Scope 1 GHG emissions sourced from the U.S. Environmental Protection Agency’s (EPA’s) Greenhouse Gas Reporting Program (GHGRP). Our results show a positive association between GHG emissions and audit fees. Additionally, we find that regulatory uncertainty surrounding U.S. climate policy intensifies this relationship. Our findings are robust to alternate model and variable specifications. This research benefits managers and policymakers by highlighting some of the financial consequences of corporate GHG emissions, especially when combined with inconsistent climate policies. It is also beneficial to accountants in practice or researchers interested in refining their audit fee models.
Sue A. Cooper PhD EA CMA MEd MBA, Visiting Associate Clinical Professor, University of Maryland, College Park, and Jared B. Cooper MEd, Certified MD Educator, Wicomico County Board of Education
Biodiversity Entrepreneurship
Review of Finance
We study an emerging class of start-up organizations focused on biodiversity conservation and the challenges they face in financing these ventures. Using a novel machine learning method, we identify 630 biodiversity-linked start-ups in PitchBook and compare their financing dynamics to other ventures. Biodiversity start-ups raise less capital but attract a broader coalition of investors, including not only venture capitalists (“value investors”) but also mission-aligned impact funds and public institutions (“values investors”). Values investors provide incremental capital rather than substituting value investors, but funding gaps persist. We show biodiversity-linked start-ups use social media activity to help connect with value investors. Our findings can inform policy and practice for mobilizing private capital toward biodiversity preservation, emphasizing hybrid financing models and strategic communication.
Sean Cao, Robert H. Smith School of Business, University of Maryland